New Peoples Bankshares, Inc. · OTC:NWPP
New Peoples Bankshares — IPO Roadshow (July 2012)
49 slides from New Peoples Bankshares's IPO roadshow presentation, Jul 20, 2012
Slide 1: Common Stock Offering
IssuerFreeWritingProspectusDatedJuly20, 2012 FiledPursuantto Rule433 Registration StatementNo. 333-180456 Common Stock Offering 2012
Slide 2: Forward-Looking Information
Forward-Looking Information Certainstatementsin this presentationmay constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations or beliefs about futu
Slide 3: Why Are We Conducting a Common Stock Offering?
Why Are We Conducting a Common Stock Offering? • To enable us to fulfill our mission of meeting the expectations of our vested stakeholders, i.e. Shareholders, Regulators, Customers, Employees and Communities by: • Increasing our capital and improving our capital ratios to strengthen our balance she
Slide 4: Offering Overview
Offering Overview Issuer: New Peoples Bankshares, Inc. (OTCBB:NWPP) Offering Common Stock Rights Offering to Existing Shareholders and Standby Public Offering, whereby shares that Structure: are not purchased by the existing shareholders may be sold to the public Offering Size: Up to $25.0 Million (
Slide 5: Competitive Strengths
BANKSHARES INC COMPETITIVE STRENGTHS
Slide 6: Our Mission
Our Mission • Our overall mission continues to be to build a high performing community bank focused on providing high quality, state of the art, “golden rule”banking services within our communities, resulting in increased shareholder value 5
Slide 7: Competitive Strengths
Competitive Strengths • New Peoples’differentiating factors that provide a foundation for a high performing institution built on customer service and franchise value creation through profitable growth: • Leading Deposit Market Share • Core Deposit Base • Historically Strong Net Interest Margin Manag
Slide 8: Competitive Strengths: Leading Deposit Market Share
Competitive Strengths • Leading Deposit Market Share • #2 in the Tri-State Area Deposit Market • 8.85% of the Tri-State Area deposits • Outpaced deposit growth for our market area which had a 5 year compounded annual rate of 2.3%, our growth was 4.6% • Strong market penetration with 23 convenient br
Slide 9: New Peoples Bank Branch Locations
New Peoples Bank Branch Locations Virginia Locations West Virginia Locations Tennessee Locations Honaker (HQ) Bluewell Kingsport Abingdon Princeton Big Stone Gap Bland Bluefield Bristol-Linden Square Castlewood Chilhowie Clintwood Gate City Grundy Haysi Jonesville Lebanon Norton Pound Pounding Mill
Slide 10: Competitive Strengths: Core Deposit Base
Competitive Strengths • Core Deposit Base • Focusedon highquality, “goldenrule” bankingserviceswithin our communities • Provider of superior service through one of the largest branch networks in our market area • Strong core deposit base funding our loan growth • 39.15% of our deposits are in checki
Slide 11: Company Statistics
Company Statistics New Peoples Bank opened in October 28, 1998 New Peoples Bankshares formed in 2001 Total Shareholders 4,437 ¹ Total Customer Relationships 47,164 ² Total Households 38,023 ² Total # of Deposits 64,099 ² Total # of Loans 11,841 ² Total # of Branches 23 ³ # of Counties Served in VA,
Slide 12: Competitive Strengths: Net Interest Margin Management
Competitive Strengths • Historically Strong Net Interest Margin Management • Successfully managing a strong net interest margin, a key contributor to delivering consistent profitability resulting in solid returns to shareholders • Historically maintained a net interest margin over 4% • We believe we
Slide 13: Net Interest Margin Trend
Net Interest Margin Trend December 31, 2007 through March 31, 2012 5.00% 4.13% 4.14% 4.35% 4.11% 4.29% 4.00% 4.15% 3.88% 3.65% 3.61% 3.76% 3.81% 3.72% 3.00% 2.00% 1.00% 0.00% 2007 2008 2009 2010 2011 3/31/2012 Net Interest Margin Peer Data BHC $500 Million to $1 Billion Peer Data Source: Federal Res
Slide 14: Competitive Strengths: Experienced Management Team
Competitive Strengths • Experienced Management Team • Our executive team consists of 4 officers with over 130 years of combined experience • An average of 33 years experience in the financial services industry • Strongly committed to leading the organization to profitability, strength and shareholde
Slide 15: Competitive Strengths: Committed Board of Directors
Competitive Strengths • Committed Board of Directors • 11 community leaders native to our market area • Activelyinvolvedin localeconomicdevelopmentandpromotionof our market area • Fully engaged in the oversight of bank management • Committed to investing $1.0 million, or 10% of the minimum offering
Slide 16: Board of Directors
Board of Directors Director Name Position Committees Since Michael G. McGlothlin Chairman of Executive(Chair), Compliance, Nominating, Offering 1998 the Board John Cox Vice Chairman Asset Liability Management, Audit, Compensation 1998 of the Board (Chair), Compliance, Executive, Nominating, Offering
Slide 17: Financial Snapshot
PNEW PEOPLES BANKSHARES INC FINANCIAL SNAPSHOT
Slide 18: Consolidated Financial Snapshot
Consolidated Financial Snapshot March 31, 2012 and December 31, 2011 Balance Sheet March 31, 2012 December 31, 2011 Total Assets $768.4 million $780.4 million Total Loans $573.8 million $597.8 million Total Allowance for Loan Loss $ 18.0 million $ 18.4 million Total Deposits $699.1 million $708.3 mi
Slide 19: Consolidated Financial Snapshot (continued)
Consolidated Financial Snapshot (continued) March 31, 2012 and December 31, 2011 Quarter Ended Year Ended Earnings March 31, 2012 December 31, 2011 Net Interest Income $ 7.1 million $ 32.2million Net InterestMargin % 4.15% 4.29% Provision for Loan Losses $ 2.0 million $ 8.0 million Noninterest Incom
Slide 20: Strategic Initiatives
BANKSHARES INC STRATEGIC INITIATIVES
Slide 21: Our Strategy
Our Strategy • Our immediate business strategy is directed towards building shareholder value by: • Returning to profitability • Improving asset quality • Enhancing our regulatory capital levels • Over the long-term, we want to position ourselves favorably to take advantage of future growth opportun
Slide 22: Strategic Initiatives - Returning to Profitability
STRATEGIC INITIATIVES - RETURNING TO PROFITABILITY 21
Slide 23: Strategic Actions and Initiatives Taken to Improve Profitability, Asset Quality, and Capital
Strategic Actions and Initiatives Taken to Improve Profitability, Asset Quality, and Capital • Improving Profitability • Continuing to maintain a net interest margin in excess of 4.00% and have historically been able to do this • Lowered our cost of deposits over 122 basis points from 2.25% at Decem
Slide 24: Net Income/(Loss) Trend
Net Income/ (Loss) Trend (In thousands) For Years Ending December 31, 2007 Through December 31, 2011 and First Quarter March 31, 2012 $6,000 $4,000 $2,000 $0 -$2,000 -$4,000 -$6,000 -$8,000 -$10,000 Net Income/ (Loss) 23 (1) Includes a one-time non cash Goodwill impairment loss totaling $4 million.
Slide 25: Provision for Loan Loss Expense and Net Charge Offs
Provision for Loan Loss Expense and Net Charge Offs (In thousands) For Years Ending December 31, 2007 through December 31, 2011 and First Quarter Ended March 31, 2012 Provision for LoanLosscomparedto Net Charge-Offs $24,000 $22,000 $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000
Slide 26: OREO Expenses/(Gains)
OREOExpenses/ (Gains) (In thousands) For Years Ending December 31, 2007 through December 31, 2011 and First Quarter Ended March 31, 2012 OREO Expenses/ (Gains) $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 ($500) ($1,000) 25
Slide 27: Strategic Initiatives - Improving Asset Quality
STRATEGIC INITIATIVES- IMPROVING ASSET QUALITY 26
Slide 28: Strategic Actions: Enhanced and Reorganized Management and Board
Strategic Actions and Initiatives Taken to Improve Profitability, Asset Quality, and Capital • Enhanced and Reorganized Management and Board of Directors • Hired a new, outside Chief Credit Officer with over 30 years experience in credit administration and loan portfolio risk • Re-positioned our for
Slide 29: Strategic Actions: Asset Quality Improvement Initiatives
Strategic Actions and Initiatives Taken to Improve Profitability, Asset Quality, and Capital • Asset Quality Improvement Initiatives • Adopted new loan policies and procedures with stricter credit underwriting standards, streamlined the loan approval process, and implemented a continuing education p
Slide 30: Nonperforming Assets
Nonperforming Assets (In thousands) December 31, 2007 through March 31, 2012 Nonperforming Assets $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2007 2008 2009 2010 2011 3/31/2012 Total NPAs $5,364 $8,943 $34,231 $59,820 $58,912 $61,355 OREO $2,051 $2,496 $5,643 $12,346 $15,092 $15,009 N
Slide 31: Delinquency Trends 30+ days
Delinquency Trends 30+ days (In thousands) December 31, 2010 through March 31, 2012 Loan Portfolio Delinquencies $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012 90 Days+ $23,404 $21,185 $31,137 $30,784 $24,820 $33,000 60-89 Day
Slide 32: Loan Risk Grades
Loan Risk Grades (In millions) December 31, 2010 through March 31, 2012 Loan Classifications Trend $750 $700 $650 $600 $550 $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012 Doubtful $6 $7 $7 $6 $3 $3 Substandard $86 $94 $99 $94 $95 $97
Slide 33: Allowance for Loan Loss as % of Loans Trend
Allowance for Loan Loss as % of Loans Trend December 31, 2007 through March 31, 2012 32
Slide 34: Strategic Initiatives - Enhancing Our Regulatory Capital Ratios
STRATEGIC INITIATIVES – 33 ENHANCING OUR REGULATORY CAPITAL RATIOS
Slide 35: Strategic Actions: Downsized Balance Sheet and Higher Risk Assets
Strategic Actions and Initiatives Taken to Improve Profitability, Asset Quality, and Capital • Proactively Downsized Balance Sheet and Higher Risk Assets • Reduced total assets $96.6 million from $865.0 million at March 31, 2011 to $768.4 million at March 31, 2012 • Reduced gross loans over $189.8 m
Slide 36: Strategic Shrinking Trend
Strategic Shrinking Trend (In Millions) December 31, 2007- March 31, 2012 35
Slide 37: Risk Weighted Assets Shrinking Trend
Risk Weighted Assets Shrinking Trend (In Millions) December 31, 2007- March 31, 2012 Total Bank Risk Weighted Assets $700 $650 $600 $550 $500 $450 $400 2007 2008 2009 2010 2011 3/31/2012 Total Assets $616.9 $639.8 $645.8 $597.3 $502.4 $481.3 36
Slide 38: Consolidated Capital Trend - Actual and Pro Forma
Consolidated Capital Trend – Actual and Pro Forma (In Millions) December 31, 2007- March 31, 2012 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $- 2007 2008 2009 2010 2011 3/31/2012 Total Common Equity Proforma Minimum Proforma Maximum 37
Slide 39: Capital Ratio Trend - Tier 1 Leverage Ratio
Capital Ratio Trend – Actual and Pro Forma Consolidated Tier 1 Leverage Ratio December 31, 2007 through March 31, 2012 12.00% 10.00% 8.50% Max 7.22% 7.72% 8.00% 6.14% 6.44% Min 6.00% 4.62% 4.23% 3.92% 4.00% 2.00% 0.00% 2007 2008 2009 2010 2011 3/31/2012 Leverage Ratio Pro Forma Min Pro Forma Max Min
Slide 40: Capital Ratio Trend - Total Risk Based Capital Ratio
Capital Ratio Trend – Actual and Pro Forma Total Risk Based Capital Ratio – Consolidated December 31, 2007 through March 31, 2012 18.00% 16.00% 15.32% Max 14.00% 12.20% Min 12.00% 10.29% 10.78% 9.83% 10.00% 8.87% 9.15% 9.08% 8.00% 6.00% 4.00% 2.00% 0.00% 2007 2008 2009 2010 2011 3/31/2012 Leverage R
Slide 41: Investment Summary
PNEW PEOPLES BANKSHARES INC INVESTMENT SUMMARY
Slide 42: Investment Summary
Investment Summary • Competitive Strengths • Attractive retail deposit franchise and proven ability to grow market share to further develop and enhance our position • Provider of quality banking services to our customers through innovative products, community involvement and excellent customer servi
Slide 43: Investment Summary
Investment Summary • Strategic Initiatives Taken • Returning to profitability • Instituted efficiencies that will produce immediate and long term cost savings • Tied employee compensation with the interest of investors • Identified and managing credit problems and expecting loan related losses to be
Slide 44: Investment Summary - continued
Investment Summary - continued • Enhancing our regulatory capital levels • Reduced balance sheet risk resulting in stronger asset quality and lower capital requirements due to lower concentrations in certain industries and loan sectors • This stock offering is the best solution available to successf
Slide 45: Appendix 1 - Financial Trends and Ratios
Appendix 1 -Financial Trends and Ratios At and for the Three Months ended March 31, At and for the Years ended December 31, 2012 2011 2011 2010 2009 2008 2007 (Dollars in thousands and shares in whole numbers) Balance Sheet Total Assets............................................. $ 768,447 $ 864,66
Slide 46: Appendix 1 (continued) - Financial Trends and Ratios
Appendix 1 (continued) – Financial Trends and Ratios At and for the Three Months ended March 31, At and for the Years ended December 31, 2012 2011 2011 2010 2009 2008 2007 Liquidity Ratios (Dollars in thousands and shares in whole numbers) Total Loans to Deposits........................... 82.07% 87
Slide 47: Appendix 2 - Pro Forma Capital Table
Appendix 2 - Pro Forma Capital Table As of March 31, 2012 ($ in thousands, except per share amounts) As Adjusted Minimum Maximum Actual $10,000,000.50 $25,000,000.50 Short-Term Debt: Capital Notes $ 5,450 $ - $ - Long-Term Debt: Trust Preferred Securities 16,496 16,496 16,496 Stockholders' Equity: C
Slide 48: Appendix 3 - Dilution Effect
Appendix 3 Dilution Effect if Existing Shareholders Do Not Participate Assuming Minimum Amount is Raised $10 Million March 31, Minimum- Notes Minimum 2012 Less Cost Converted Total New Effect Tangible Capital $ 26,069,336 $ 9,525,000.50 $ 5,719,839.04 $ 15,244,839.54 $ 41,314,176 # of Shares 10,010,
Slide 49: Glossary of terms
Glossary of terms Allowance for Loan Losses The- allowance for loan losses is maintained at a level that, in management’s judgment, is adequate to absorb credit losses inherent in the loan portfolio. The loan portfolio is analyzed periodically and loans are assigned a risk rating. Allowances for imp